SOURCE: Kandi Technologies, Corp.

November 19, 2007 16:30 ET

Kandi Reports Significant Growth in Third Quarter Sales and Net Income on Continuing Strength of Beach Vehicle Sales

Revenues Grow More Than 470% to Approximately $8.85 Million as Net Income Rises More Than 580% to $871,498 or $0.04 per Share; Company Maintains Outlook for 150% Increase in Full Year Sales and Sees Growth in Net Income to More Than $5 Million

JINHUA, ZHEJIANG PROVINCE, CHINA--(Marketwire - November 19, 2007) - Kandi Technologies, Corp. (the "Company") (PINKSHEETS: KNDI), an emerging US traded PRC-based leader in small vehicle production, including ATVs, golf carts and approximately 15% of the world Go-Kart market, today announced that, led once again by strong sales of the Go-Kart beach vehicles developed and introduced by the Company, revenue in its third quarter ended September 30, 2007, grew more than 470% to $8,854,668 compared with $1,552,217 in the same period last year.

The company also achieved an approximately 587% increase in net income, from $126,908 in last year's third quarter to $871,498 in the third quarter of 2007. EPS in the 2007 third quarter reached $ 0.04 compared with $ 0.01 in the third quarter last year. As of November 15, 2007, the Company had 19,961,000 shares outstanding.

Through the first nine months of 2008, the Company said sales rose approximately 311% to $26,022,205, compared with $6,338,562 in the same period in 2007, while nine month net income grew nearly ten-fold from $37,165 in 2006 to $3,727,193, or $0.25 per share, in the current year's first nine months.

The Company reported that gross profit in the third quarter grew approximately 246% to $1,465,063 compared to the same period last year, while through the first nine months this year the increase in gross profit was approximately 496% to $5,355,224. Contributing to these figures, was a decline in the cost of goods through the first nine months of the year to approximately 79% of revenues compared to approximately 86% in the same period last year. However, in the third quarter, the cost of goods sold rose somewhat to 83% of sales primarily due to higher raw material costs, while selling and marketing expense as well as R&D costs declined as a percentage of sales. Additionally, general and administrative expenses in the period rose in absolute terms, but with management's continuing focus on cost reduction, declined substantially as a percentage of total sales.

As previously reported, sales in the third quarter of 2007 were expected to be somewhat lower than sales in the second quarter of the year, as the Company took advantage in the second quarter of an anticipated third quarter reduction in the export tax rebate by sharply increasing shipments in June.

Mr. Hu Xiaoming, president and CEO of Kandi, commented, "We're very pleased with the continuing positive reception for our ATV and Go-Kart vehicles which will continue to be the key contributors to our growth over the near and intermediate term. In this regard, we will continue to launch additional new models and lines to maintain and expand our position in the world market and, in time, expect our greatest growth will come from our domestic market. Specifically, in 2007, we expect to produce 50,000+ vehicles of all types which we intend to further expand in 2008 while maintaining our focus on gross margins, which we see reaching more than 20% by year end 2007."

Mr. Xiaoming added, "Of perhaps the greatest significance to the future of the Company is the continuing effort we are making to launch before year end our super mini and, farther in the future, our mini sub-compact auto sales, which we expect in five years will be the largest contributors to our growth. In October, we reported a successful first showing of our KD-08 mini sub-compact for the domestic market, which drew across the board wide praise and, over the next few weeks, we expect to see the first exports of our exciting super-mini to the North American market."

Full Year Outlook

As previously announced, the company said it expects full year revenues, excluding possible car sales this year, to reach approximately $39 million, which would be more than a 150% increase over the approximately $14.5 million in revenues achieved in 2006. Full year net income also is expected to grow substantially, to in excess of $5 million, as compared with reported net income in 2006 of $1.1 million.

About the Company

Kandi Technologies, Inc. (formerly Stone Mountain Resources, Inc.) is a PRC (China)-based vehicle machinery producer, concentrating on three areas of small vehicle production: Go-Karts, Special Purpose Vehicles and Casual Purpose Vehicles. At present, it is among the leading producers of Go-Karts in the world, with an estimated 15% share of market and a goal of doubling this share, in large part by becoming the leading producer of this increasingly popular recreational product in China. Focusing on the country's rapid economic development, the Company also sees an increasing need for transportation vehicles for specific purposes, in particular mini-size pesticide spraying vehicles and mini-service vehicles. The Company produces a wide and growing range of All Terrain Vehicles (ATVs) which it believes represent the highest quality vehicles of this type in China, aimed at the export market as well as the rapidly growing market in the PRC. The Company also is focused on the development of fashionable, energy saving mini-cars. It has produced mini-cars that have completed the trial stage and is now preparing to start mass production. It expects to begin to export these cars to the American market, followed by sales in China when the domestic market is more mature. Kandi is a US full reporting company whose shares are traded under the symbol KNDI.

The Company's products can be viewed at http://www.kandivehicle.com.

Information Regarding Forward-Looking Statement

Except for historical information contained herein, the statements in this Press Release are forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties, which may cause our actual results in future periods to differ materially from forecasted results. These risks and uncertainties include, among other things, product demand, market competition, and risks inherent in our operations. These and other risks are described in our filings with the Securities and Exchange Commission.

                        KANDI TECHNOLOGIES, CORP.
                (FORMERLY STONE MOUNTAIN RESOURCES, INC.)
                            AND SUBSIDIARIES
                  CONDENSED CONSOLIDATED BALANCE SHEETS

                                              September 30,  December 31,
                                                  2007           2006
                                              -------------- --------------
                            ASSETS             (Unaudited)
CURRENT ASSETS
  Cash and cash equivalents                   $      663,308 $    1,034,017
  Restricted cash                                  8,666,535      9,092,423
  Accounts receivable                             12,598,385      7,572,565
  Deposit for acquisition                          9,740,470              -
  Inventories                                      3,378,476      5,463,179
  Notes receivables                                1,181,535        430,811
  Other receivables                                1,603,678      2,988,016
  Prepayment and deposits                            738,388        332,556
  Advance to suppliers                                46,884        184,221
  Due from employees                                       -         31,901
  Deferred tax assets                                  4,684             99
                                              -------------- --------------
     Total Current Assets                         38,622,343     27,129,788
                                              -------------- --------------
NON CURRENT ASSETS
  Plant and equipment, net                         9,346,741      9,224,935
  Land use rights, net                               389,321        395,926
  Construction in progress                         1,064,855        307,158
  Deferred tax assets                                  3,502          2,784
                                              -------------- --------------
     Total Non Current Assets                     10,804,419      9,930,803
                                              -------------- --------------

     TOTAL ASSETS                             $   49,426,762 $   37,060,591
                                              ============== ==============


                LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES
  Accounts payable                            $    7,586,970 $    6,626,826
  Other payables and accrued expenses                298,639        310,406
  Short-term bank loans                           16,021,654      9,163,737
  Current portion of long-term bank loan           1,920,934      1,920,934
  Customer deposits                                1,107,022        601,168
  Notes payable                                   10,854,656     10,779,563
  Deferred taxes                                       8,167              -
  Due to related parties                               3,680              -
                                              -------------- --------------
     Total Current Liabilities                    37,801,722     29,402,634
                                              -------------- --------------

NON CURRENT LIABILITIES
  Deferred tax liabilities                             2,546          3,277
                                              -------------- --------------
     Total Non Current Liabilities                     2,546          3,277
                                              -------------- --------------

     TOTAL LIABILITIES                            37,804,268     29,405,911
                                              -------------- --------------

 CONTINGENCIES

SHAREHOLDERS' EQUITY
  Common stock, $0.001 par value, 100,000,000
   shares authorized;                                 19,961         12,000
   19,961,000 and 12,000,000 shares
   issued and outstanding at
   September 30, 2007 and December
   31, 2006, respectively
  Additional paid-in capital                       7,138,105      7,154,193
  Retained earnings                                3,823,217         96,024
  Accumulated other comprehensive income             641,211        392,463
                                              -------------- --------------
 Total Shareholders' Equity                       11,622,494      7,654,680
                                              -------------- --------------

 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY   $   49,426,762 $   37,060,591
                                              ============== ==============



See accompanying notes to the condensed consolidated financial statements




                        KANDI TECHNOLOGIES, CORP.
                (FORMERLY STONE MOUNTAIN RESOURCES, INC.)
                             AND SUBSIDIARIES
  CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
                               (UNAUDITED)



                        Three Months Ended         Nine Months Ended
                          September 30,               September 30,
                    --------------------------  --------------------------
                        2007          2006          2007          2006
                    ------------  ------------  ------------  ------------
REVENUES, NET OF
 SALES TAX          $  8,854,668  $  1,552,217  $ 26,022,205  $  6,338,562

COST OF GOODS SOLD     7,389,605     1,129,089    20,666,981     5,440,601
                    ------------  ------------  ------------  ------------
GROSS PROFIT           1,465,063       423,128     5,355,224       897,961
                    ------------  ------------  ------------  ------------

Selling and
 marketing               292,074        54,140       657,342       139,480

General and
 administrative          248,992        65,501       614,615       285,757

Research and
 development              16,122        37,777        68,925        87,538
                    ------------  ------------  ------------  ------------
Total operating
 expenses                557,188       157,418     1,340,882       512,775
                    ------------  ------------  ------------  ------------

INCOME FROM
 OPERATIONS              907,875       265,710     4,014,342       385,186

INTEREST EXPENSE,
 NET                    (272,818)     (174,741)     (723,171)     (450,734)

GOVERNMENT GRANTS          3,049        30,968        15,233        97,194

FORFEITURE OF
 CUSTOMER DEPOSIT        233,584             -       500,304             -

OTHER INCOME
 (EXPENSES), NET              20         4,971       (77,404)        5,519
                    ------------  ------------  ------------  ------------

INCOME BEFORE
 INCOME TAXES            871,710       126,908     3,729,304        37,165

INCOME TAXES                (212)            -        (2,111)            -
                    ------------  ------------  ------------  ------------
NET INCOME               871,498       126,908     3,727,193        37,165
                    ------------  ------------  ------------  ------------

OTHER COMPREHENSIVE
 INCOME

Foreign currency
 translation gain         45,188       292,272       248,748       340,532

Income tax expense
 related to other
 comprehensive
 income                  (14,912)      (96,450)      (82,087)     (112,376)
                    ------------  ------------  ------------  ------------

OTHER COMPREHENSIVE
 INCOME,
 NET OF TAX         $     30,276  $    195,822  $    166,661  $    228,156
                    ------------  ------------  ------------  ------------

COMPREHENSIVE
 INCOME             $    901,774  $    322,730  $  3,893,854  $    265,321
                    ============  ============  ============  ============

WEIGHTED AVERAGE
 NUMBER OF SHARES
 OUTSTANDING, BASIC
 AND DILUTED          19,961,000    12,000,000    14,741,150    12,000,000
                    ============  ============  ============  ============

NET INCOME PER
 COMMON SHARE,
 BASIC AND DILUTED  $       0.04  $       0.01  $       0.25  $       0.00
                    ============  ============  ============  ============


                            KANDI TECHNOLOGIES, CORP.
                      (FORMERLY STONE MOUNTAIN RESOURCES, INC.)
                                AND SUBSIDIARIES
       CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                    FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007
                                   (UNAUDITED)


                                      Common Stock          Additional
                               ---------------------------   Paid-in
                                  Shares       Par Value     Capital
                               ------------- ------------- ------------
BALANCE AT JANUARY 1, 2007        12,000,000 $      12,000 $  7,154,193

Foreign currency translation               -             -            -

Recapitalization                   7,961,000         7,961      (16,088)

Net income                                 -             -            -
                               ------------- ------------- ------------
BALANCE AT SEPTEMBER 30, 2007     19,961,000 $    $ 19,961 $  7,138,105
                               ============= ============= ============


                                              Accumulated
                                                 Other
                                 Retained    Comprehensive
                                 Earnings       Income       Total
                               ------------- ------------- ------------
BALANCE AT JANUARY 1, 2007     $      96,024 $     392,463 $  7,654,680

Foreign currency translation               -       248,748      248,748

Recapitalization                           -             -       (8,127)

Net income                         3,727,193             -    3,727,193
                               ------------- ------------- ------------
BALANCE AT SEPTEMBER 30, 2007  $   3,823,217 $     641,211 $ 11,622,494
                               ============= ============= ============


See accompanying notes to the condensed consolidated financial statements


                        KANDI TECHNOLOGIES, CORP.
                (FORMERLY STONE MOUNTAIN RESOURCES, INC.)
                             AND SUBSIDIARIES
             CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (UNAUDITED)

                                                      Nine Months Ended
                                                        September 30
                                                  ------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:                 2007        2006
                                                  -----------  -----------
  Net income                                      $ 3,727,193  $    37,165
  Adjustments to reconcile net income to net cash
   provided by (used in)
  operating activities:
  Depreciation and amortization                       987,296      725,613
  Deferred taxes                                        2,133            -
  Forfeiture of customer deposit                     (500,304)           -

  Changes in operating assets and liabilities,
   net of effects of acquisition:
  (Increase) Decrease in:
  Accounts receivable                              (5,025,820)  (2,119,004)
  Inventories                                       2,084,702      180,420
  Other receivables                                 1,384,338      693,923
  Due to employee                                     139,695      (13,542)
  Prepayments for goods and prepaid expenses         (405,831)  (1,004,419)

  Increase (Decrease) in:
  Accounts payable                                    960,146      624,376
  Other payables and accrued liabilities              (19,672)       3,581
  Tax payable                                          (2,953)           -
  Customer deposits                                 1,006,158      280,497
                                                  -----------  -----------
  Net cash provided by (used in) operating
   activities                                       4,337,081     (591,390)
                                                  -----------  -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Restricted cash                                     425,887    1,982,603
  Purchases of plant and equipment                 (1,102,497)    (367,076)
  Purchases of construction in progress              (757,697)  (1,405,602)
  Deposit for acquisition                          (9,740,470)           -
  Issuance of notes receivable                     (6,318,385)    (616,844)
  Repayment of notes receivable                     5,567,660      576,781
        Payment for acquisition, net for cash
         acquired                                           -      (69,391)
  Reverse merger with SMOU, net of cash acquired          373            -
                                                  -----------  -----------
  Net cash (used in) provided by investing
   activities                                     (11,925,129)     100,471
                                                  -----------  -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from short term bank loans              18,493,438    8,307,307
  Repayment of short term bank loans              (11,635,522)  (5,218,755)
  Proceeds from notes payable                      23,284,106      101,155
  Repayment of notes payable                      (23,209,013)  (3,899,978)
  Repayment of advances to related parties             35,582      830,933
                                                  -----------  -----------
  Net cash provided by financing activities         6,968,591      120,662
                                                  -----------  -----------

 NET DECREASE IN CASH AND CASH EQUIVALENTS           (619,457)    (370,257)

  Effect of exchange rate changes on cash             248,748      340,532
  Cash and cash equivalents at beginning of
   period                                           1,034,017      876,989
                                                  -----------  -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD          $   663,308  $   847,264
                                                  ===========

SUPPLEMENTARY CASH FLOW INFORMATION
     Income taxes paid                            $     3,011  $         -
                                                  ===========  ===========
     Interest paid                                $   682,093  $   440,453
                                                  ===========  ===========



See accompanying notes to the condensed consolidated financial statements.

Contact Information

  • Contacts:

    Kandi Technologies, Corp.
    Hu Xiaoming
    President and CEO
    (86-0579) 82239700

    US Investors
    Press
    Focus Asia Partners
    Robert Agriogianis
    Tel: 973-245-8099
    Fax: 973-966-6252